LTC Bullet: Cato on LTC

Friday, November 21, 2025

Seattle—

LTC Comment: Cato published papers on long-term care financing reform in 2005 and again this year. After slow progress for two decades a change for the better may be coming soon. Reflections after the ***news.***

*** REGISTRATION IS NOW OPEN for the 2026 Intercompany Long Term Care Insurance Conference! Organizers report: “Our in-person conference March 8-11, 2026 at the Rosen Shingle Creek in Orlando, FL is now accepting attendee registrations! As always, our agenda will include numerous educational sessions over two days across seven tracks with ample time for networking and reconnecting with colleagues. We still have room for exhibitors and sponsors!  Please contact us at info@iltciconf.org if you are interested in either opportunity to showcase your products and services to our attendees. Everyone who's anyone in Long Term Care Planning will be there. What about your company?” Damon and I will be there to work and cover the conference, respectively. See you then. ***

LTC BULLET: CATO ON LTC

LTC Comment: In 2005, public policy regarding LTC financing was in ferment. The U.S. economy slowed to a crawl. State and federal politicians worried about making fiscal ends meet. Medicaid LTC expenditures soared while public interest in private LTC insurance waned. Policymakers worried about funding LTC, but frequent appeals for a big new entitlement program for that purpose fell flat. The best thing I can say about that time two decades ago is that LTC and fiscal responsibility still mattered to legislators and policymakers.

I spent half that year commuting from Seattle to Washington, DC—2 weeks on, 2 weeks off—to advocate for tighter Medicaid financial eligibility rules, stronger estate recoveries, and more support for private LTC insurance. I spoke to everyone who would listen from all the LTC trade associations, to members of Congress and their staffs, to experts at the most influential think tanks, Cato, AEI, and Heritage. We had high hopes to pass legislation that would encourage the public to plan early for LTC and save, invest or insure for that risk instead of ending up on Medicaid by default.

That was how things stood on September 1, 2005 when the Cato Institute published “Aging America’s Achilles’ Heel: Medicaid Long-Term Care.” If you don’t feel like reading that 18-page article, listen instead to this 6-minute interview that summarizes it generated by Google Illuminate. Or, better yet, check out this hour-long debate between yours truly and Vincent Russo, who is a Medicaid planner with three offices in New York as well as a founding member and fifth president of the National Academy of Elder Law Attorneys, the Medicaid planners’ trade association.

As it turned out, we did get meaningful legislation the following March 2006 when Vice President Dick Cheney flew back from the Middle East expressly to break a Senate deadlock and pass the Deficit Reduction Act of 2005. The DRA ’05 enacted the first ever cap on Medicaid home equity, setting the exemption between $500,000 and $750,000 at state option. The legislation also unleashed the LTC Partnership program that had been stifled for years by a prohibition against exempting sheltered assets from estate recovery. Those were two steps in the right direction, but not nearly enough.

Unfortunately, the DRA ’05 was the last significant progress America has made toward saving Medicaid LTC benefits for the needy and diverting middle class and affluent people toward savings, investment or insurance for LTC. An amazing thing happened in the U.S. during those intervening years. The Federal Reserve pushed interest rates to near zero setting off a government, corporate, and personal spending spree such as the country had never seen before. State and federal budgets exploded; national debt soared to $38 trillion; and personal wealth from home equity, stocks, and bonds skyrocketed. The wealthy profited more than ever; the needy made few if any gains.

As long as this economic party continued, the powers-that-be had little interest in fixing Medicaid LTC. I’d noticed over the years that when the economy went into recession and politicians couldn’t stay within budgets, they showed interest in ideas and recommendations to control Medicaid LTC costs, especially when proposed to improve care access and quality at the same time. But when the good times rolled, they lost interest. That’s why I’m hopeful now.

The U.S. economy is showing signs of stress. Interest rates are up. National debt is in the stratosphere. Interest on the debt exceeds defense expenditures. Deficits approaching $2 trillion per year increase the debt immediately and boost debt-service costs over time. Doubts emerge that the United States can service its debt going forward. That means it will struggle repaying bondholders for their investments resulting in America’s creditors losing confidence in the dollar. The “debasement trade” tempts investors to abandon fiat currencies like the dollar for hard assets like gold and silver.

In other words, conditions are lining up for policymakers and politicians to take the need for LTC financing reform seriously again. Therefore, timing was right for another Cato paper to point the way. Cato published “Better Long-Term Care for Billions Less” on November 13, 2025, bookending its 2005 coverage of the issue. Please read the new paper or listen to this 7-minute “interview” summarizing it. Then share your feedback, positive or negative, with me at smoses@centerltc.com. Thanks for your time and consideration.